Court File and Parties

Ontario – Superior Court of Justice

Re: Bobbie Mann v. Marcus Chac-Wai

Citation: 2017 ONSC 3416 Court File No.: CV-16-561227 Motions Heard: May 23, 2017

Counsel: Alex Minkin for the plaintiff Rolf M. Piehler for the defendants

Before: Master R.A. Muir

Endorsement

[1] There are two motions before the court. The first is brought by the plaintiff for an order for payment of certain funds held in trust. The funds are a portion of the proceeds from the sale of property over which the defendants had registered a certificate of pending litigation (“CPL”). In effect, the plaintiff’s motion is for a discharge of the CPL. The defendants also seek an order discharging a CPL registered by the plaintiff on property owned by them. The defendants also seek leave to issue a CPL pursuant to section 103 of Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 42.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 with respect to a third property.

[2] The plaintiff and the defendant Marcus Chac-Wai are partners in some form of real estate purchase and sale joint venture. Both sides agree, in general terms, that these two individuals entered into some form of business partnership in 2012 for the purpose of purchasing, renovating and selling properties for a profit.

[3] The partnership operated on an informal basis to say the least. There is no written partnership or joint venture agreement. The record keeping is sporadic and incomplete. There appears to be a co-mingling of personal and partnership finances. It appears that both sides may have advanced funds from time to time in furtherance of the various partnership ventures.

[4] Mr. Chac-Wai claims an interest in two properties based on the partnership described above. Those properties are located at 49 Loyalist Road Toronto (“Loyalist”) and 14740 Keele Street in the Township of King (“Keele”). The plaintiff claims an interest in Mr. Chac-Wai’s home based on a claim for an equitable mortgage. That property is located at 2399 Doulton Drive Mississauga (“Doulton”).

[5] The parties agree on the test to be applied on these motions. The factors the court is to consider when deciding a motion brought on notice seeking leave to issue a CPL or on a motion to discharge a CPL are found in Interrent International Properties Inc. v. 1167750 Ontario Inc., 2013 ONSC 4746 (Master). At paragraph 15 of Interrent, Master MacLeod identifies those considerations. They can be summarized as follows (insofar as they are relevant to the issues on these motions):

• On a contested motion, the court will review all of the evidence put forward by both parties and determine on the totality of the evidence before it whether or not there is a triable issue.
• In making this determination the court need not accept the pleadings or the affidavit evidence uncritically but will examine all of the evidence after cross examination to determine whether or not the claim has a reasonable prospect of success.
• Reasonable prospect of success means not only a reasonable prospect of proving breach of contract but also succeeding in obtaining a remedy related to an interest in land. The court must be satisfied that damages would not be an appropriate remedy.
• Even if the plaintiff has a potential case for a remedy related to an interest in land the court may still refuse the CPL if it would be unjust to order it. The court must consider the equities of granting this form of interim relief. This is not a mechanical application of a test but an exercise of discretion to achieve a just result.
• Factors the court may consider include the strength of the case, the uniqueness of the land, the adequacy of damages as a remedy, whether the CPL appears to be for an improper purpose, and the balance of convenience.

[6] These are the factors and principles I have considered in determining the issues on these motions. Having done so, I have concluded that it is in the interest of justice that the status quo between the parties be preserved pending a determination of this proceeding on its merits.

[7] I am satisfied on the evidence before me on these motions that there exists a triable issue with respect to the parties’ various claims to an interest in the several properties. I do find the complete absence of a written agreement to be troubling. The parties’ record keeping is incomplete and unclear. This is obviously an unsatisfactory manner of carrying on business.

[8] However, there is documentary evidence that funds were advanced by the plaintiff to the defendant which the plaintiff contends were for the purpose of financing renovations to the Doulton property. The defendant acknowledges the advances but states that the funds had nothing to do with the Doulton property but were funds advanced in connection with the parties’ business of the purchase and sale of other properties. I am simply unable to determine with any degree of certainty what those funds were used for. This is a function of the parties’ record keeping for which both sides are responsible. I am therefore satisfied that the plaintiff has established an interest in the Doulton property in the form of a claim for an equitable mortgage sufficient for the purposes of determining these CPL motions.

[9] Similarly, there is evidence that Mr. Chac-Wai has made monetary and other contributions to the Loyalist and Keele properties that would indicate an ownership interest as part of the acknowledged joint venture. Mr. Chac-Wai’s evidence is that the financing for the Loyalist property purchase can be traced back to a property, the registered owner of which was the defendant Mimar Holdings Corporation (“Mimar”), a corporation controlled by Mr. Chac-Wai. The parties agree that Mr Chac-Wai did some work on the Loyalist property but there exists a dispute over the utility and quality of that work. In addition, there is evidence that with respect to the Keele property, Mr. Chac-Wai or his company has been paying expenses related to the property and dealing with issues that arose after a fire at the property.

[10] I am therefore satisfied that there exist triable issues with respect to whether the Loyalist and Keele properties form part of the partnership between the parties and the value of the parties’ respective contributions to the joint venture. To the extent that the Keele and Loyalist properties are part of the joint venture, Mr. Chac-Wai has an ownership interest in the properties sufficient for the purposes determining these CPL motions.

[11] A consideration of the balance of convenience favours a preservation of the status quo. There is a suggestion that the plaintiff may be re-locating to Cuba but there is no compelling evidence of this other than a bald allegation by Mr. Chac-Wai and the fact that the plaintiff recently visited Cuba. The plaintiff has no present plans to deal with the Keele property. There is no evidence that Mr. Chac-Wai will be prejudiced by the CPL on the Doulton property. There is no evidence that the holding of 50% of the Loyalist funds in trust is causing any hardship to the plaintiff.

[12] Both sides took issue with the disclosure made by the other side when they obtained the initial CPL orders on the Doulton Property and the Loyalist property. I agree that material non-disclosure by itself may be grounds for discharging a CPL obtained without notice. However, I do not view the alleged non-disclosure as material in the circumstances of these motions. The plaintiff takes issue with Mr. Chac-Wai failing to include evidence that he was paid approximately $190,000.00 for construction work on a property located at 2106 Grange Drive, Mississauga. I do not view this omission as material because it does not detract from the basis of his claim to an interest in the Loyalist property based on the acknowledged joint venture. It simply relates to his contributions to the partnership and is a matter of accounting rather than a basis for denying leave to issue a CPL. Mr. Chac-Wai takes issue with the fact that the plaintiff failed to provide details of their joint venture when she obtained a without notice CPL on the Doulton property on the basis of a claim for an equitable mortgage. I do not accept this argument. The fact that the parties were also business partners was disclosed by the plaintiff on the without notice motion. She specifically noted that she and Mr. Chac-Wai were business partners since 2012 involved in the purchase, renovation and sale of properties. In my view, that level of disclosure was sufficient in the circumstances of that without notice motion.

[13] In my view, the most important factor in arriving at the just determination of these motions is the insufficient documentary record. The parties chose to carry on business together in a rather informal manner. The result is that the court is unable to arrive at a clear understanding of the merits of the various claims and to what extent they enjoy a reasonable prospect of success. The parties tell two very different stories. That is a matter best left for trial, or perhaps summary judgment, where the court can consider these claims on their merits with a full evidentiary record.

[14] The plaintiff’s motion is therefore dismissed. The 50% proceeds of sale from the Loyalist property will remain in trust pending further order of the court. The defendants Mimar and Mr. Chac-Wai are hereby granted leave to issue a CPL in respect of the Keele property. The balance of the relief on the defendants’ motion is dismissed.

[15] If the parties are unable to agree on the issue of the costs of these motions, including the costs of the appearances before Masters Hawkins and Pope, they shall provide the court with brief written submissions by July 7, 2017.

Master R.A. Muir

Date: June 1, 2017